Are These 2 Stocks Losing The Spark - Spark New Zealand Limited And Spark Infrastructure Group?

  • Apr 07, 2019 AEST
  • Team Kalkine
Are These 2 Stocks Losing The Spark - Spark New Zealand Limited And Spark Infrastructure Group?

Spark New Zealand Limited (ASX: SPK)

Spark Finance Limited, the wholly-owned subsidiary of Spark New Zealand Limited (ASX: SPK) which carries out the borrowing activities for the group, announced recently that it has extended the term of its NZ$200 million committed standby revolving credit facility by 1 year, to mature on 30 April 2022. The facility is provided from the participation of Australasian and global banks.

Simon Moutter has recently resigned as Managing Director of the Company, effective from 30 June 2019. The Board has appointed Jolie Hodson as new Chief Executive of the company with effect from 1 July 2019. Mr. Hodson is currently serving as Customer Director at the Spark Group.

On the financial front, the company reported revenue of $1,754 million for the half (H1FY19), down $7 million year-on-year, as revenue from growth products was negated by declines in legacy voice and managed data. Reported net profit after tax was down 5.6% to $153 million primarily due to a $28 million decline in Southern Cross dividend (no dividend was declared in H1 FY19) and associated increase in Spark’s effective income tax rate.

On the price-performance front, the stock of Spark New Zealand Limited last traded at $3.450, with a market capitalization of ~$6.32 billion. The stock has generated a negative YTD return of 12.54%, with negative returns of 5.62%, 12.77% and 4.57% over the past six months, three months and one-month period respectively. Its 52-week high price stands at $4.123, and 52-week low price stands at $3.076 with an average trading volume of ~1.25 million. The stock is currently trading at a PE multiple of 18.49x with an annual dividend yield of 5.76%.

Spark Infrastructure Group (ASX: SKI)

Spark Infrastructure Group (ASX: SKI) is a utility company and is one of Australia’s leading network owner that invests in utility infrastructure and operates particularly for Australian electricity networks. The company is into operations of delivering safe and reliable electricity through its network to more than 5.6 million Australian homes and businesses.

On the financial performance front, the adjusted EBITDA stood at $825.4 million, up 4.8% on FY2017, driven by continued cost efficiencies and growth in both the regulated and unregulated businesses. Further, the standalone net operating cash flow of the company is up by 8.5% to $290.2 Mn as a result of 7.3% higher cash distributions from investment businesses. The company made distributions of 16.0 cents per security (cps) in FY18 in line with guidance, up by 4.9% on the previous year.

Going forward it is expected that the earnings and operating cash flows of the company will be under stress as a result of regulatory pressures such as reduction in regulated rates of return and revenue tax allowances.

On the price-performance front, the stock of Spark Infrastructure Group last traded at $2.190, with a market capitalization of ~$3.73 billion. The stock has generated a positive year-to-date (YTD) return of 2.3% with returns of -1.77%, -1.33% and -5.53% over the past six months, three months and one-month period respectively. Its 52-week high price stands at $2.530, and 52-week low price stands at $2.125 with an average trading volume of ~5.55 million.


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